Legendary investor Warren Buffett advises to be fearful when others are greedy, and be greedy when others are fearful. One way we can try to measure the level of fear in a given stock is through a technical analysis indicator called the Relative Strength Index, or RSI, which measures momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.In trading on Tuesday, shares of Walter Investment Management Corp ( WAC) entered into oversold territory, hitting an RSI reading of 24.4, after changing hands as low as $5.05 per share. By comparison, the current RSI reading of the S&P 500 ETF (SPY) is 45.7. A bullish investor could look at WAC's 24.4 RSI reading today as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side. The chart below shows the one year performance of WAC shares: Looking at the chart above, WAC's low point in its 52 week range is $5.05 per share, with $23.70 as the 52 week high point — that compares with a last trade of $5.33.
TheStreet’s Fundamentals of Investing Course will teach you the keys to making the right decisions in any market.
TheStreet’s Personal Finance Essentials Course will teach you money management basics and investing strategies to help you avoid major financial pitfalls.
TheStreet Courses offers dedicated classes designed to improve your investing skills, stock market knowledge and money management capabilities.
More from Stocks
Snap Gains on Analysts Upgrades as Messaging App Maker Wins Back Wall Street
Snap shares were indicated sharply higher Tuesday following a pair of analyst upgrades for the instant messaging app maker as it wins back faith from Wall Street amid improving revenues and longer user engagement.
Central Bankers Prove Again They're the Most Powerful Force in the Market
Mario Draghi indicated the European Central Bank is prepared to boost the European economy with more stimulus, and that's driving equity markets higher here on Tuesday.
Dow Futures Jump, European Stocks Gain as ECB Easing Signals Add to Fed Pressure
U.S. equity futures traded higher Tuesday, while European stocks reversed earlier declines, as investors reacted to comments from European Central Bank President Mario Draghi that suggested further monetary easing just hours ahead of the Federal Reserve's two-day policy meeting
Facebook, Federal Reserve, MoneyGram, E-Cigarettes - 5 Things You Must Know
U.S. stock futures rise as investors react to comments from European Central Bank President Mario Draghi that suggests further monetary easing just hours ahead of the start of the Federal Reserve's two-day policy meeting; details of Facebook's 'Libra' cryptocurrency are revealed by its backers in a published white paper.